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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 1983 OF 1992
Transocean Shipping Agency Pvt. Ltd. .. Petitioners
V/s
The Collector of Customs (Prevention) & Ors. .. Respondents
Mr. D.C. Gomes for the Petitioner.
Mr. P.S. Jetly with Mr. Rohit B. Pardeshi for the respondents.
CORAM : FERDINO I. REBELLO & D.G. KARNIK, JJ.
DATE : 13TH AUGUST 2009
Judgment : (Per D.G. Karnik, J.)
1. By this petition, the petitioners seek an order of injunction
restraining the respondents from recovering the penalty from them of
Rs.5,00,000/- imposed on the Second Officer of the Russian Vessel m.v.
YELENA STASOVA (for short “the vessel”) and/or by encashing the
bank guarantee and other incidental reliefs.
2. The petitioners are the agents of the said vessel which entered
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the Port of Bombay on 3rd February 1991. On the basis of intelligence
received, on 9th February 1991 the Directorate of Revenue Intelligence,
Bombay Zonal Unit rummaged the vessel at 3, Indira Docks, Bombay
and found on board contraband material, namely 25 Silver bars and 25
small white silver bars. The vessel was detained and the petitioners
were called upon to furnish a bond with bank guarantee in the sum of
Rs.62,00,000/- for release of the vessel as per the draft of the format
provided by the Directorate. The petitioners contended that they were
not obliged to furnish a bond or a bank guarantee in the form furnished
by the Directorate and, in any event were not required to furnish a
bond for recovery of the penalty, if any, which may be imposed on any
officers of the ship. The respondents, however, insisted that the vessel
will not be allowed to sail from the Bombay Port unless the bank
guarantee was furnished and, therefore, the petitioners were
constrained to furnish a bank guarantee of Rs.62,00,000/-. A show
cause notice on 29th May 1991 to the petitioners, the Master of the
vessel, the vessel’s agent in Singapore and Mr. Yogorov Aleksandr, the
Second Officer who was alleged to have put the silver bars on board, to
show cause why the vessel should not be confiscated under section
115(2) of the Customs Act, 1962 (for short “the Act”) and why the
contraband silver bars be not confiscated under section 111(d) of the
Act. After the usual hearing, by an order dated 15th July 1992 the
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Collector of Customs ordered confiscation of the contraband silver bars
and imposed a personal penalty of Rs.5,00,000/- on Mr. Aleksandr, the
Second Officer under section 112(1)(i) of the Act. The Collector,
however, held that the vessel was not liable for confiscation under
section 115 of the Act and ordered its release to the owners, i.e.
principles of the petitioners. The Collector also did not impose any
penalty on the Master of the vessel or the petitioners. As the vessel had
sailed along with the Second Officer Mr. Aleksandr, the attempt to
recover penalty of Rs.5,00,000/- from him has failed. The Customs
Authority, however, sought to recover the penalty by encashment of the
bank guarantee given by the petitioners for release of the said vessel.
The petitioners have approached this Court for injuncting the
respondents from encashing the bank guarantee for recovery from
them of the penalty imposed on the Second Officer and also for return
of the bank guarantee duly cancelled.
3. The Collector by his order dated 15th July 1992 has held that the
contraband silver bars were loaded onto the vessel by Mr. Aleksandr
without the knowledge and consent of the owner or the Master of the
ship. It is for this reason that the Collector did not impose a penalty of
confiscation of the vessel and did not impose any fine on the owner or
the Master of the ship. The Collector has further held that the goods
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were loaded by the Second Officer Mr. Aleksandr without the
knowledge, consent or connivance of the owner or the Master of the
ship and he alone was liable to pay the penalty. It is therefore clear
that under the order of the Collector, the penalty imposed on the
Second Officer Mr. Aleksandr cannot be recovered from the owner or
the Master of the ship. Consequently, the petitioner, who is an agent of
the owner, is also not liable to pay the penalty imposed on the Second
Officer.
4. Learned counsel for the respondents however submitted that the
respondents were entitled to recover the penalty from the petitioners
on the basis of the bond given by them for release of the ship. Reliance
is placed on clause (e) of the bond which reads as under:
“(e) THE OBLIGOR (i.e. the petitioner) shall pay the fine,
penalty and/or other incidental charges, if any, imposed on
and/or due from them or any crew member under the order
in adjudication passed by the said Collector of Customs in
the subject proceedings.”
Counsel for the respondents submitted that the bond was an
independent contract entered into by the petitioners with the Customs
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Authorities and they are liable under the bond to pay the penalty.
5. Per contra, learned counsel for the petitioners submitted that the
bond was obtained from the petitioners under pressure and coercion by
detaining the vessel. The petitioners were required to give a bank
guarantee for the release of the vessel only for securing payment of any
fine imposed on the vessel or at the most on the owner or the Master of
the ship. They were not liable to give bond for payment of any fine or
penalty that might be imposed on any crew member for any illegal and
clandestine act under the Customs Act. However, the bond was forcibly
taken under threat of detaining the vessel and not releasing it. In the
circumstances, the counsel submitted that the bond could not be
enforced against the petitioners for recovery of penalty imposed not on
them but on Mr. Aleksandr, the Second Officer. In support, the counsel
referred to and relied upon a decision of this Court in Hongkong Island
Shipping Co. Ltd. v. Additional Collector of Customs (Preventive), 1986
(26) ELT 35 (Bom.).
6. In Hongkong Island Shipping Co. Ltd. (supra), the contravening
goods were found in a cupboard in the ship. The adjudicating
authority did not disbelieve the words of the Captain of the ship that
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they were kept there without his knowledge. The Customs Authorities
insisted on a similar bond to be obtained from the ship owners
undertaking the liability to pay the fine or the penalty imposed or due
from any crew member after the order of adjudication. This Court held
that though the Customs Authorities had secured the bond of the ship
owners, it would not be appropriate to provide for recovery from the
owners of fine or penalty imposed on any crew member under the
adjudication proceedings if the contraband articles were brought on the
ship without the knowledge or connivance of owner or the Master of
the ship in spite of reasonable precaution taken by them. In our view,
in the present case, without going into the contention of the petitioners
that the bond was obtained from them by force for securing the liability
for payment of penalty, if any, imposed on the crew member for
bringing in the goods without the knowledge and connivance of the
Master or owner of the ship, the petition would have to be allowed
following the decision of this Court in the case of Hongkong Island
Shipping Co. Ltd. (supra). According to the petitioners, they executed
the bond in view of the decision of this Court that they would not be
liable for payment of penalty which may be imposed on a member of
crew (in this case Second Officer Mr. Aleksandr) for his illegal acts
made without the knowledge or connivance of the owner or the Master
of the ship. The decision of this Court was rendered in the year 1986
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and has been accepted by the Customs Authorities and has not been
appealed against. Relying on that decision and believing that the bond
would not be enforced against them for recovery of any penalty
imposed not on them but a crew member, they executed the bond. In
view of this, the respondents are not entitled to recover the amount of
penalty imposed on the Second Officer Mr. Aleksandr from the
petitioners on the basis of a bond.
7.
In view of what is stated above, the petition succeeds. We are
informed that in lieu of extension of bank guarantee the amount
thereof has been deposited in this Court and the bank guarantee was
released. If so, the petitioners are entitled to the refund of the money
so deposited together with interest, if any, accrued if the money has
been invested.
6. For these reasons, the Rule is made absolute to the extent
indicated above. The amount shall be refunded to the petitioners on
production of a certified copy of this order.
(D.G. KARNIK, J.) (FERDINO I. REBELLO, J.)
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